CB Bureau Addressing a question on how intensely will the new Section
135, which is part of Companies Bill 2011, affect management of companies, ‘union
corporate affairs minister Veerappa Moily said, ‘We are not interested in
micro-management of a company. It is (section 135) just an oversight clause.’ He
said that his ministry would remain the sole regulator of companies. Section
135 of the bill has led to some concern among the corporate houses, as it
intends to make corporate social responsibility (CSR) obligatory.
Moily was addressing the 26th western regional council
meeting of Institute of Chartered Accountants of India.
The minister’s statement seems to have allayed fears of some
corporate groups that are yet to have a CSR department.
According to Section 135, every company with a net worth of Rs 500 crore or more, or turnover
of Rs 1,000 crore or more, or net profit of Rs 5 crore or more in a financial
year will have to form a CSR committee, consisting of three or more directors,
of which at least one would be an independent director. This committee will have to ensure that the
company spends, in every financial year, at least two per cent of the average
net profits made during the three immediately preceding years, towards CSR activities. The bill also
makes it compulsory for the company to specify reasons if it fails to spend the
amount.
Moily also said that
the ministry would soon start consultations for framing a ‘national corporate
governance policy’. He said that no law should be made that weaken the
country’s institutions and that the government was committed to come up with a
strong Lokpal Bill.
‘We are receptive to ideas to create a strong Lokpal Bill.
Our view is that it should be practical and should not create another hierarchy
of bureaucracy,’ the minister said.